Donald Trump Winning The Conflict of Interest on the Russian Sanctions.

There’s plenty to say about Donald Trump tapping ExxonMobil CEO Rex Tillerson to be his secretary of state, But one eyebrow-raising angle here is that Exxon has billions of dollars at stake in one of the biggest foreign policy decisions Trump will consider over the next few years whether to maintain sanctions on Russia.

Exxon, the world’s largest oil company, has long had its eye on Russia’s vast oil and gas deposits. Between 2011 and 2013, Exxon signed a series of deals with the Russian state-owned oil giant Rosneft to explore the Black Sea, develop shale resources in western Siberia, and most importantly drill for oil in the Arctic, one of the biggest untapped fossil fuel resources left in the world.

For Exxon, which famously missed out on the massive US fracking boom, these deals were crucial for the company’s future. “Arctic oil, in particular, would’ve been a game changer for Exxon,” says Fadel Gheit, an oil analyst at Oppenheimer & Co. It was supposed to be a decades-long investment worth many billions.

But Exxon’s activities ground to a halt in 2014, after the Obama administration slapped sanctions on Russia’s oil industry over Russian incursions into Ukraine. Despite having just made a landmark oil discovery in the Kara Sea, Exxon was forced to stop work, and Arctic exploration faded. At the time, Tillerson told shareholders that he was opposed to targeted sanctions on Russia: “We do not support sanctions, generally, because we don’t find them to be effective unless they are very well implemented comprehensively,” he said in May 2014.

His new boss appears to agree: Reince Priebus, Trump’s incoming chief of staff, recently said Trump was not yet sure whether he’d keep those Russian sanctions in place. The potential conflicts of interest here are considerable: Tillerson himself owns $218 million in Exxon stock and a pension reportedly worth $70 million, though it’s not clear what he’ll do with those investments once he joins the Trump administration.

What we do know is that Tillerson could soon find himself in a position of influence over the sanctions question and that lifting them would be a boon to Exxon. It’s conceivable Tillerson could stay impartial and judge the issue purely on its policy merits, but this conflict will be looming in the background. The issue is also of utmost interest to Russian President Vladimir Putin (not to mention those keeping an eye on global warming).

If those sanctions aren’t lifted, and if Russia can’t lure back Western oil companies, then the country is facing an inexorable decline in its oil and gas production in the coming years which, if handled poorly, could devastate the government budget and the economy.

In a lot of ways, Putin and Exxon need each other. And Tillerson is now in the middle. How Exxon became so deeply invested in Russian oil The Prirazlomnaya offshore ice-resistant oil-producing platform is seen at Pechora Sea, Russia, on May 8, 2016. ExxonMobil has been interested in Russia ever since the 1990s when former CEO Lee Raymond tried (and failed) to buy a stake in the Russian energy giant Yukos.

During that period, Tillerson was overseeing an Exxon oil and gas project on Russia’s Sakhalin island and reportedly came to know Putin well during that time. Tillerson took the helm of Exxon in 2006, at a time when global oil prices were rising and many of the easiest-to-drill fields around the world were already developed. Increasingly, energy companies were looking to new frontiers like Russia, which lacks the technology to develop all of its fields and has more than $8.2 trillion in untapped oil and gas, according to Bloomberg, particularly in the icy Arctic. For its part, Russia needed Western expertise to develop these resources. Other Western companies, including Chevron and BP, tried to pitch themselves as the answer to Russia’s woes.

But it was Tillerson and Exxon that finally managed to ink a series of deals with Rosneft to explore for oil in the Black Sea, to exploit shale resources in western Siberia, and to develop three fields in the Kara Sea in the Arctic a region that Rosneft says holds more oil than the entire Gulf of Mexico .

Exxon and Rosneft invested $3.2 billion in the Kara Sea project with the hope that this bet would eventually be repaid many times over. The next year, Putin awarded Tillerson Russia’s Order of Friendship medal for his company’s oil work in the country.

But everything hit a snag in 2014 after Russian forces moved into Ukraine and annexed Crimea. In response, the Obama administration put in place US sanctions on Russia’s oil and gas industry that forbid technology transfers and told Exxon it was to halt all offshore drilling work with Rosneft by the end of September.

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